INTERNATIONAL

BUSINESS AND TRADE

MIDTERM

Group 2 Members:
Alcala, Nicka
Fermanes, Cedric
Gascon, Helena
Gavilo, Nathaniel
Imbien, Maurene
Javier, Rona
Jorolan, Jhennylyn
Libutan, Johndavid
Magracia, Humprey
Matito, Kyla
Mendo, Joy
Otara, Bea

Submitted to:
Mary Ann Belesario
Table of contents

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The Political, Economic, Social, Technological, Environmental
and Legal Factors 3
Political Environment 3
Political Risk 5
The International Legal Environment 7
Intellectual Property Rights 9
Economic Systems 10
Economic Variable and The Business Environment 12
Technological Environment 13
Technology Transfer 14
International Socio-Cultural Environment 16
National Cultural Characteristics 16
Cultural Impacts on International Business 19
National, Organization, and Occupational Cultures 20
Strategies for Developing Intercultural Competence 23
International Ethical and Ecological Environment 23
Business Ethics 24
Ethics and the Corporate Culture 24
Different Ethical Positions 24
International Business Ethics 26
International Efforts to Improve Business Ethics 26
Ecological or Environmental Issues 28
International Strategic Issues 30
Business Strategy - Ideas and Concepts 31
Choice of Strategy 31
Corporate Strategy in a Global Economy 34
International Business 34
Value Chain 35
International Business Strategies 35

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Institutional Strategies and International Business 36
Techniques for Strategic Analysis 36
Definition of Terms 38
References 40
I. THE POLITICAL, ECONOMIC, SOCIAL, ECONOMIC, SOCIAL,
TECHNOLOGICAL, ENVIRONMENTAL AND LEGAL FACTORS

PESTEL Analysis
❖ PESTEL/PESTLE analysis (formerly known as PEST analysis) is a
framework or tool used to analyze and monitor the macro-environmental
factors that may have a profound impact on an organization’s
performance.

Micro and Macro Environment Factors

❖ PESTEL Analysis focuses on Macro-Environment. Macro-Environment
consists of Political, Economic, Social, Technological, Environmental, and

Legal Factors.

Macro-Environment Factors
➔ Political Factors
➔ Economic Factors
➔ Social Factors
➔ Technological Factors
➔ Environmental Factors
➔ Legal Factors

II. POLITICAL ENVIRONMENT

- Politics plays an important role in shaping business worldwide.

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- The political leadership in each country controls whether international business
occurs in that country. So, managers need to know how to interact between
business and government and to know how to react to conflict of interests.
- The political environment includes all laws, government agencies, and lobbying
groups that influence or restrict individuals or organizations in the society.
The role and function of political system

● To integrate society
● The way to conduct society
● The way to choose or to have a government to manage a country
● For policy making
● It depends on the political ideologies

Political institutions

- Are the organizations in a government that create, enforce, and apply

laws.

1. Legislative
- The most powerful institution whose role is to make the law and others
such as policy making and approval of budgets.
2. Executive
- Referred to as the government. It is responsible for implementing the law
and to shape, direct, and control the business activities.
3. Judiciary
- Responsible for interpreting and applying laws.
- To settle legal disputes that affect business considerably.

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Relationship between business and government

- Responsibility - Accountability
- Duty

Responsibility in the Workplace

- The duty to complete tasks; not doing so is a failure of responsibility
- Ongoing while final goal is being worked towards
- Can be shared among a team; many people can have the same task or different
tasks that work towards the same goal.
- Specifically task-focused

- Cannot be assigned to someone, each person must take on their own (more
behavioral)

Accountability in the Workplace

- The duty to give an account of tasks after they are completed.
- Happens after a situation occurs.
- Should be assigned to just one person to avoid thinking someone else will be
doing the job
- Specifically results-focused
- Is assigned (ideally to one person) - they are held accountable for results and
potential consequences of not reaching desired results.

RESPONSIBILITIES OF BUSINESS TOWARDS GOVERNMENT

● Regular payment of taxes
● Environmental preservation
● Government Contracts

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 RESPONSIBILITIES OF GOVERNMENT TOWARDS BUSINESS
● Provision of peaceful atmosphere
● Provision of a system of money and credit
● Balanced development and growth
● Provision of basic infrastructure ● Provision of information
● To assist small scale industries
● Licensing and inspection
● Protection from foreign competition
Why is the Political Environment Important to managers?
● To be successful, managers must learn to deal with public institutions and non-
public institutions in addition to market forces.
● Managers must learn to cope with varying degrees of governmental intervention
in economic decisions.
● The political impact on business activities is relatively complex because the
domestic political process is subject to various influences & managers must deal
with different political processes in different countries. Steps to establish
appropriate political strategies
● Identify the issue: What is the specific issue facing a firm such as environmental
standards, workers right, terrorism and etc.
● Define the Nature: Define the nature of the politics issue
● Assess the potential political action of other companies and of special interest
groups who are the parties that are affected and able to generate political
pressure and what their strategies are.
● Identify important institutions and key individuals: legislatures, regulatory
agencies, courts, important personalities.
● Formulate strategies: What is the key objective, the major alternatives, and likely
effectiveness of alternative strategy.
● Determine the impact of implementation.
● Select: The most appropriate strategy & implement.

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III. POLITICAL RISK
Political Risk is an exercise of political power that can affect a company’s value.

Effects of Political Risk

● Political risk in international business results from various factors that can
negatively affect a company’s income or complicate its business strategy.
● Government actions, like confiscating a company’s assets, make it difficult to
acquire financing, which can affect the ability of a company’s supply chain to
support production.
How to manage Political Risk
● Business leaders can manage political risk using a three-step process. First,
risk managers must identify political risks - whether they come in the form of
higher taxes, terrorist activity or something else -- determine how those
issues might affect the company’s ability to meet its business objectives.
● Next, managers must quantify the impact of risks on company performance
using a financial model, such as discounted cash flow.
Managers then connect that impact to a company’s risk tolerance.

IV. THE INTERNATIONAL LEGAL ENVIRONMENT

PUBLIC INTERNATIONAL LAW

● Also called Law of Nations

● the system of rule and principles governing the conduct of, and
relationship between, states and international organizations as well as
some of their persons
The United Nations Charter sets out the fundamental principles of modern public
international law

✔ Promotion of human rights;

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✔ The strict limitation on the right to use force against other states ✔ The
strict prohibition on the acquisition of territory by force.

Subjects of International Law

● States are the primary subject of international law.
● also regulate the actions of other entities:
A. international organisations
B. non-state actors
C. international non-governmental organizations
D. multinational companies.

Public international law and the protection of human dignity

Several branches of public international law combine to protect universal values relating
to human dignity.

The branches
● international humanitarian law
● international refugee law ● international criminal law
● international human rights law.

Relationship between domestic and international law

* The relationship between domestic and international law on a procedural level can be
complex, particularly where a national court is applying international law directly.
"The self-evident principle of international law that a State cannot invoke its municipal
law as the reason for the non-fulfillment of its international obligations.” - Hersch
Lauterpact

Sources of International Law

● Treaty law
● Customary International Law

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 ● General Principles of law recognized by civilised nations

State Responsibility -
any state that violates its international obligations must be held accountable for its
actions.
Grave violations of international Law - Jus cogens and erga omnes obligations

Jus cogens and erga omnes obligations

● Jus Cogens norms - referred to as peremptory norms of international law.
● Jus cogens status - reserved for the most fundamental rules of international law,
which are recognised and accepted by the international community as rules of
which no exceptions are allowed.
● Erga omnes obligations - The violation of a number of provisions under
international law - usually those that are categorised as jus cogens rules - gives
rise to "erga omnes" obligations.

Private International Law

● Also called Conflict of Laws
● relationships between persons and organizations engaged in international
transactions and addresses which laws will apply when the parties are in a legal
dispute.
- Contracts,
- Marriage and Divorce
- Jurisdiction,
- Recognition of Judgments,
- Child adoption and Abduction

What is the difference between public international law and private international law?
Public International Law

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body of rules which is concerned solely with the rights and obligations of sovereign
states.
Private international law
referred to as ‘conflict of laws’, consists of rules which govern relations between private
entities and decide which domestic law and/or courts can adjudicate issues with an
“international” component
V. INTELLECTUAL PROPERTY RIGHTS

What are intellectual property rights?

● Intellectual property rights are the rights given to persons over the
creations of their minds.
● Intellectual property rights are customarily divided into two main areas:
a. Copyrights and rights related to copyright
b. Industrial property

Copyrights and rights related to copyright

The rights of authors of literary and artistic works (such as books and other writings,
musical compositions, paintings, sculpture, computer programs and films) are protected
by copyright.

Industrial property
Industrial property rights are exclusive rights that are often registered allowing the
operator to protect its investments in product development, a brand or design.

VI. ECONOMIC SYSTEMS

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 Economic Systems
❖ Economic system is a means by which societies or governments organize
and distribute available resources, services, and goods across a
geographic region or country.

Economic systems regulate factors of production, including:

➔ Land
➔ Labor
➔ Capital
➔ Entrepreneurship
Types of Economic Systems
Economic systems can be categorized into four main types:
1. Traditional economic system
➢ The traditional economic system is based on goods, services, and work,
all of which follow certain established trends.
➢ It relies a lot on people, and there is very little division of labor or
specialization.
➢ Traditional economic system decisions are based on traditions and
practices upheld over the years and passed on from generation to
generation.
2. Command economic system
➢ In a command system, there is a dominant, centralized authority – usually
the government – that controls a significant portion of the economic
structure.
➢ Also known as a planned system, the command economic system is
common in communist societies since production decisions are the
preserve of the government.
➢ Command economic system is an authoritative system wherein decision
making is centralized in the government or a planning committee.

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 3. Market economic system
➢ Market economic systems are based on the concept of free markets.
➢ The government exercises little control over resources, and it does not
interfere with important segments of the economy.
➢ Instead, regulation comes from the people and the relationship between
supply and demand.
➢ Market economic system is the most democratic form of economic
system.
4. Mixed system
Mixed systems combine the characteristics of the market and command
economic systems.
➢ In a mixed economic system, free markets co-exist with government
intervention, and private enterprises co-exist with public enterprises.
➢ The advantages of a mixed economy include efficient production and
allocation of resources, as well as improvement of social welfare.

VII. ECONOMIC VARIABLES AND THE BUSINESS ENVIRONMENT

Economic variables
- Is any measurement that helps to determine how an economy functions.
Examples of Economic Variables:
- GDP
- Interest rate
- Unemployment rate
- Inflation rate

Business environment

- Is the combination of internal external factors that influence a company’s

operating situation.

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 - Means a collection of all individuals, entities and other factors, which may or may
not be under the control of the organization, but can affect its performance,
profitability, growth and even survival.

Components of business environment:

1. Internal environment
- The factors which exist within the organization, imparting strength or
causing weakness to the organization, comes under the internal
environment. It includes: value system, vision and mission, objectives,
corporate culture, human resources and labor union.
2. External environment
- Consists of those factors which provide an opportunity or pose threats to
the business.
Classification of external environment:

1. Micro environment - the immediate periphery of the business that has a

continuous and direct impact on its operation.
2. Macro environment - such an environment that influences the functioning and
performance of every business organization, in general.

VIII. TECHNOLOGICAL ENVIRONMENT

Technological Environment
❖ The technological environment is part of the company’s external environment
related to developments and changes in technology.
❖ Technological change can have an impact on the decision taken by international
business.

What role does the technological environment play in the business?

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 ❖ The main role of technology in business is to drive growth and improve
operations.
❖ Different industries and companies rely on technology because
➢ it improves business communication
➢ analytic targeting tools
➢ propels marketing and business growth

How technology affects business?

❖ Security Risks
➢ Every business that has an online presence is always subject to security
risks. This is why businesses hire the best of security specialists to
prevent cyber-attacks.
❖ Business Growth
➢ Technology is helping businesses grow at a much faster rate than when
technology was not available. They help in boosting sales and generating
more revenue.
❖ Boosts Online Presence
➢ When it comes to social media, it is important that a business targets
social media channels that are aligned with the nature of the business.
Tools that help you identify preferred content that will help your business
better in the online world.
❖ Process Improvement
➢ Systems like digital file transfer services, email and Internet calling serve
to accelerate data transfer and communication while reducing costs.

IX. TECHNOLOGY TRANSFER

It refers to the process of conveying results stemming from scientific and
technological research to the marketplace and to wider society, along with
associated skills and procedures, and is as such an intrinsic part of the
technological innovation process.

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How does Technology Transfer occur?
❖ Technology is typically transferred through a license agreement in which the
university retains ownership of the intellectual property, while the industrial
partner obtains conditional rights to use and develop a technology.
❖ Before the technology transfer can take place, inventors must define and
disclose the nature of their invention to the institution’s technology transfer office.
❖ New inventions are evaluated by technology licensing experts, who determine
the intellectual property position and potential market for the technology
❖ The technology transfer office will not be able to proceed with the invention if
there is no intellectual property available, no value to industry or appropriate
competitiveness in the market

Why is Technology Transfer Important?

Technology transfer helps develop early stage intellectual property into tools for
direct use by the research community, or into bases for new platforms, products,
or services to be made into products for public use.

Forms of Technology Transfer

❖ Scientific Dissemination- Sharing information with interested parties in
government, industry, or academia.
❖ Direct Application- Putting knowledge to work directly in the programs of the
DOT or other agencies.
❖ Commercial Transfer- Sharing knowledge with other organizations, especially
from industry, that can realize the commercial potential of new or improved
technologies.
❖ Importing Resources- Bringing in outside technology in cooperative and
meaningful ways.

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Technology Transfer Process

❖ Technology transfer is the movement or flow of technical knowledge, data,

designs, prototypes, materials, inventions, software, and/or trade secrets from
one organization to another organization or from one purpose to another
purpose.
❖ The technology transfer process is guided by the policies and values of each
respective organization.

Evaluating Disclosures
● Unmet need- What is the problem that your invention addresses and how well
does it, or could it, meet that need?
● Market assessment- What is the potential market for the technology and what is
the total market value?
● Competition- Who are the competitors? At what stage of development are they?
● Technical hurdles- How long is the development process?
● Intellectual Property Rights- What type of intellectual property is it, and does it
require protecting?
● Development Costs- What is the likely time, resource commitment and cost of
development?
● Development Path- licensing to an existing company, forming a new company
or development through not-for-profit routes.

X. INTERNATIONAL SOCIO-CULTURAL ENVIRONMENT

International Socio Cultural Environment

● Socio-Cultural Environment in International Business is a set of customs, beliefs,

behaviour, and practices that exists within a population. International companies
often include an examination of the socio-cultural environment prior to entering
their target markets. Basically, socio-cultural factors are customs, lifestyles, and
values that characterize a society.

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 ● Cultural aspects include aesthetics, education, language, law and politics,
religion, social organizations, technology and material culture, values and
attitudes Social Factors include reference groups, family, role and status in the
society.

XI. NATIONAL CULTURAL CHARACTERISTICS

National cultural characteristics

● It is the set of norms, behaviors, beliefs, customs, and values shared by the
population of a sovereign nation. Also refers to specific characteristics such as
language, religion, ethnic and racial identity, and cultural history and traditions
teams.
Dimension of natural culture

● The Hofstede model of national culture consists of six dimensions. The cultural
dimensions represent independent preferences for one state of affairs over
another that distinguish countries (rather than individuals) from each other.

● The country scores on the dimensions are relative, in that we are all human and
simultaneously we are all unique. In other words, culture can only be used
meaningfully by comparison. The model consists of the following dimensions:

Power Distance Index (PDI)

● This dimension expresses the degree to which the less powerful members of a
society accept and expect that power is distributed unequally. The fundamental
issue here is how a society handles inequalities among people.

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 ● People in societies exhibiting a large degree of Power Distance accept a
hierarchical order in which everybody has a place and which needs no further
justification. In societies with low Power Distance, people strive to equalize the
distribution of power and demand justification for inequalities of power.
Individualism versus Collectivism (IDV)

● The high side of this dimension, called Individualism, can be defined as a

preference for a loosely-knit social framework in which individuals are expected
to take care of only themselves and their immediate families.
● Its opposite, Collectivism, represents a preference for a tightly-knit framework in
society in which individuals can expect their relatives or members of a particular
ingroup to look after them in exchange for unquestioning loyalty. A society’s
position on this dimension is reflected in whether people’s self-image is defined
in terms of “I” or “we.”

Masculinity versus Femininity (MAS)

● The Masculinity side of this dimension represents a preference in society for

achievement, heroism, assertiveness, and material rewards for success. Society
at large is more competitive. Its opposite, Femininity, stands for a preference for
cooperation, modesty, caring for the weak and quality of life. Society at large is
more consensus-oriented.

● In the business context Masculinity versus Femininity is sometimes also related

to “tough versus tender” cultures.
Uncertainty Avoidance Index (UAI)

● The Uncertainty Avoidance dimension expresses the degree to which the

members of a society feel uncomfortable with uncertainty and ambiguity. The

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 fundamental issue here is how a society deals with the fact that the future can
never be known: should we try to control the future or just let it happen?

● Countries exhibiting strong UAI maintain rigid codes of belief and behaviour, and
are intolerant of unorthodox behaviour and ideas. Weak UAI societies maintain a
more relaxed attitude in which practice counts more than principles.
Long term Orientation versus Short Term Normative Orientation

● Every society has to maintain some links with its own past while dealing with the
challenges of the present and the future. Societies prioritize these two existential
goals differently.

● Societies who score low on this dimension, for example, prefer to maintain time-
honoured traditions and norms while viewing societal change with suspicion.
Indulgence versus Restraint (IVR)

● Indulgence stands for a society that allows relatively free gratification of basic
and natural human drives related to enjoying life and having fun. Restraint
stands for a society that suppresses gratification of needs and regulates it by
means of strict social norms.
National Cultural Characteristics in a Workplace (Individualist & Collectivist)
Individualist
○ Same value standards apply to all: universalism
○ Other people seen as potential resources
○ Task prevails over relationship
○ Calculative model of employer–employee relationship
Collectivist
● Value standards differ for in-group and out-groups: particularism Other people
seen as members of their group
● Relationship prevails over task
● Moral model of employer–employee relationship

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 ● Large power distance (power respect)
● Hierarchy reflects on existential inequality of roles
● Subordinates expect to be told what to do
● Ideal boss is a benevolent autocrat (good father)
● Small power distance (power tolerance)

XII. CULTURAL IMPACTS ON INTERNATIONAL BUSINESS

Cultural Impacts on International Business

● As companies continue to expand across borders and the global marketplace

becomes increasingly more accessible for small and large businesses.
Multinational and cross-cultural teams are likewise becoming ever more
common, meaning businesses can benefit from an increasingly diverse
knowledge base and new, insightful approaches to business problems.
Communication

● Effective communication is essential to the success of any business venture, but it

is particularly critical when there is a real risk of your message getting “lost in
translation.” In many international companies, English is the de facto language of
business. But more than just the language you speak, it’s how you convey your
message that’s important.
Workplace Etiquette

● The concept of punctuality can also differ between cultures in an

international business environment. Different ideas of what constitutes being
“on time” can often lead to misunderstandings or negative cultural perceptions.
For example, where an American may arrive at a meeting a few minutes early,
an Italian or Mexican colleague may arrive several minutes — or more — after
the scheduled start-time (and still be considered “on time”).

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Organizational Hierarchy

● Organizational hierarchy and attitudes towards management roles can also vary
widely between cultures. Whether or not those in junior or middle-management
positions feel comfortable speaking up in meetings, questioning senior decisions,
or expressing a differing opinion can be dictated by cultural norms.

● Often these attitudes can be a reflection of a country’s societal values or level of

social equality. For instance, a country such as Japan, which traditionally values
social hierarchy, relative status, and respect for seniority, brings this approach
into the workplace. This hierarchy helps to define roles and responsibilities
across the organization. This also means that those in senior management
positions command respect and expect a certain level of formality and deference
from junior team members.

XIII. NATIONAL ORGANIZATION AND OCCUPATIONAL CULTURES

● National Culture represents the beliefs and practices shared by the
citizens of the same nation. Within national cultures, values are generally
seen as stable over time.
● National values reflect the traditions of the nation-state over time, it will
change slightly from generation to generation, but the overall values will
remain the same.
● An example of national culture is traditional Chinese wedding dates, it is
often chosen by an astrologer who used the bride and groom’s birthdays
to figure out the luckiest day they should wed.
● Organizational culture refers to the beliefs and behaviors that determine
how a company’s employees and management interact and handle
outside business transactions. Often, organizational culture is implied, not
expressly defined, and organizational culture is implied, not expressly

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 defined, and develops organically over time from the cumulative traits of
the people the company hires.
● A company’s culture will be reflected in its dress code, business hours,
office setup, employee benefits, turnover, hiring decisions, treatments of
clients, client satisfaction, and every other aspect of operations.
● Don’t confuse culture with organizational goals or a mission statement,
although both can help define it.
● Culture is created through consistent and authentic behaviors, not press
releases or policy documents.

4 Types of Organizational Culture

❖ The work on defining how each of the four quadrants is related to
company characteristics was conducted by Kim Cameron and Robert
Quinn (1999).
1. The Clan Culture – this culture is rooted in collaboration. Members
share commonalities and see themselves are part of the one big
family who are active and involved.
2. The Adhocracy Culture – this culture is based on energy and
creativity. Employees are encouraged to take risks, and leaders are
seen as innovators or entrepreneurs.
3. The Market Culture – this culture is built upon the dynamics of
competition and achieving concrete results. The focus is goal-
oriented, with leaders who are tough and demanding.
4. The Hierarchy Culture – this culture is founded on structure and
control. The work environment is formal, with strict institutional
procedures in place for guidance.
Occupational Culture is a means for coping with the uncertainties arising
routinely in the course of doing a job. An occupational culture is a reduced, selective,

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and task-based version of culture that includes history and traditions, etiquette and
routines, rules, principles, and practices that serve to buffer practitioners from contacts
with the public.

National and Organizational Cultural Dimensions

● As well as Hofstede’s seminal work, Trompenaars (1993) set out a cultural
model consisting of seven dimensions, five of which are grouped under
‘relationships with people’ and the other two are concerned with time and
the environment.
1. Universalism vs. Particularism – In universal cultures rules are
favored over relationships. Contractual agreements are considered
of the utmost importance, and logical, rational analytical thinking
and professionalism are of great importance.
2. Individualism vs. communitarianism – This is almost identical to
Hofstede’s dimension, with cultures towards the former end of the
spectrum seen as reinforcing the role of the individual and those
towards the communitarianism end of the spectrum seen as
emphasizing the role of groups and larger systems.
3. Achieving or ascribing – In achieving societies the emphasis is
on esteem related to past achievements. In ascribing societies
achievement is a more collective affair and organizations in these
societies often justify a high-power distance so that things get
done.
4. Relating to nature – This concerns beliefs about nature’s ability to
be controlled. Inner-directed cultures want to overcome nature and
depend a great deal on one’s own control, while outer-directed
cultures see themselves more as a product of the outside world
and external environment.

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 5. Perceptions of time – This reflects different attitudes to time:
synchronic and circular attitudes allow parallel activities and are
less concerned with punctuality.
In a sequential culture the focus is on rational efficiency and
time is viewed in a more linear fashion.

XIV. STRATEGIES FOR DEVELOPING INTERCULTURAL COMPETENCE

● The degree of similarity among the cultural norms of the individuals on the team.
● The extent to which such norms are manifested in the group.
● The level of fluency in the common language used by the team.
● The communication styles and expectations of what constitutes effective group
behaviour
● The management style of the team leader.

XV. INTERNATIONAL ETHICAL AND ECOLOGICAL ENVIRONMENT

● Those ways of acting or being that are regarded as acceptable by some
reference group at a time and place
● The set of organizing principles by which people live together.
● Milton Friedman stated ‘There is only one social responsibility of business – to
use its resources and engage in activities designed to increase its profits so long
as it stays within the rules of the game, which is to say, engages in open and free
competition without deception or fraud’ (Friedman 1970: 126).
Principal–agent problem

● Refers to a potential conflict over the ‘organising principles’

for the business or institution

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 ● Principals - those who own the business ● Agents - those
who run the business

XVI. BUSINESS ETHICS

Business ethics is a practice that determines what is right, wrong, and
appropriate in the workplace. Business ethics is the study of how a business
should act in the face of ethical dilemmas and controversial situations.It is often
guided by laws, and keep companies and individuals from engaging in illegal
activity such as insider trading, discrimination and bribery.
XVII. ETHICS AND THE CORPORATE CULTURE
Corporate culture is the collection of values, beliefs, ethics and attitudes
that characterize an organization and guide its practices. The corporate culture
guides how the employees of the company ethically act, feel, and think. The
culture of a company influences the moral judgment of employees and
stakeholders.

XVIII. DIFFERENT ETHICAL POSITIONS

There are generally three philosophical approaches, or what may be
considered the science, to ethical reasoning:
1. Utilitarian Ethics
The first ethical system in normative ethics, utilitarianism, is often
equated with the concept of “the greatest good for the greatest number.” The
idea is that ethical decisions are made based on the consequences of the action,
which is why it is also sometimes called consequentialism.
There are three main concerns that seem to arise when public relations
professionals rely on utilitarian ethics to make decisions.

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 ● First, rather than looking at the choice or action itself, decision-
makers are forced to guess the potential outcomes of their choice
in order to determine what is ethical.
● Second, utilitarian ethics also “presents questions of conflict with
regard to which segment of society should be considered most
important” in weighing the “good” or outcome.
● The third objection is that it is not always possible to predict the
outcome of an action.
2. Deontological Ethics
The second prominent concept, deontological ethics, is associated
with the father of modern deontology, Immanuel Kant. He was known for
the ‘Categorical Imperative’ that looks for transcendent principles that
apply to all humans.
The core concept behind this is that there are objective obligations,
or duties, that are required of all people. When faced with an ethical
situation, then, the process is simply one of identifying one’s duty and
making the appropriate decision.
The challenges to this perspective, however, include;

1) conflicts that arise when there is not an agreement about the

principles involved in the decision;
2) the implications of making a “right” choice that has bad
consequences; and
3) what decisions should be made when duties conflict. These
challenges are definitely ones that should be considered when
relying on this as an ethical system
3. Virtue Ethics
Finally, a third and growing area of philosophical reasoning with ethics is
known as virtue ethics, one that has gained more attention in public relations
scholarship in recent years.

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 This philosophy stems from Aristotle and is based on the virtues of the
person making a decision. The consideration in virtue ethics is essentially “what makes
a good person,” or, for the purpose of this discussion, “what makes a good public
relations professional?”
Virtue ethics require the decision-maker to understand what virtues are
good for public relations and then decisions are made in light of those particular virtues

XIX. INTERNATIONAL BUSINESS ETHICS

As businesses expand internationally, they must not only understand an
organization’s mission, vision, goals, policies and strategies but also must take
into account the legal and ethical issues in international business. When
companies plan their long-term expansion into a foreign environment, they must
tackle serious moral and ethical challenges and decision-making in order to
make their expansion a success.
Some of the most common ethical issues in international business include
outsourcing, working standards and conditions, workplace diversity and equal
opportunity, child labor, trust and integrity, supervisory oversight, human rights,
religion, the political arena, the environment, bribery and corruption.
Cultural considerations can also make or break a company conducting
business globally. Every culture and nation has its own history, customs,
traditions and code of ethics. Cultural barriers include language, which often
means a company must rely on translators when speaking to business contacts
and customers. Gender can be an issue in countries where women do not have
the same rights as men.
In order for international business ethics to have any kind of strength or
enforcement beyond the companies’ own decisions to obey such ethical
standards, there must be some kind of legal agency that can investigate and
prosecute any breaches of ethical employment standards.

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XX. INTERNATIONAL EFFORTS TO IMPROVE BUSINESS ETHICS
Certain conditions in which global business operates that are essential for
understanding the normative role of business.

❖ Know the laws.

The Foreign Corrupt Practices Act of 1977 prohibited businesses and anyone
representing businesses from bribing foreign government officials in order to gain
new or retain existing business. According to the US Department of Justice,
businesses must also comply with the act's accounting provisions, and their
books must accurately reflect their business transactions.

❖ Pledge to follow international business guidelines.

Businesses can agree to follow international guidelines established by the

Organization for Economic Co-operation and Development (OECD), a
multinational think tank that addresses global business issues, in addition to
federal law.

❖ Develop a unified strategy.

To best navigate cultural differences when doing business abroad, best practices
consulting firm LRN recommended developing a unified corporate strategy that
can be implemented at each of your company's locations, whether at the
company headquarters or a branch office in another country. The strategy should
include a code of conduct that clearly outlines the company's fundamental
guiding principles for employee behavior and decisions.

❖ Communicate clearly and understand the differences.

Intercultural communication is essential if your company wants to establish a

presence in another country. Businesses that embrace culture while maintaining
their unique company identity and values are the ones that succeed.

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 ❖ Put the company guidelines into practice.
Once your company's values and code of conduct are established, the next step
is to ensure that those policies are followed. Each employee should be educated
on the company's policies and procedures, as well as how to conduct
themselves as employees.

❖ Assess and acknowledge differences.

It is possible to embrace certain cultural differences without jeopardizing the

company's core values, as long as those actions do not violate US law.
According to the Justice Department, bribes are legal in some countries and are
tax deductible as a business expense.

XXI. ECOLOGICAL OR ENVIRONMENTAL ISSUES

Environmental issues are defined as problems with the planet's systems
(air, water, soil, etc.) that have developed as a result of human interference or
mistreatment of the planet.
Ecological/Environmental Issues
❖ Pollution
In this context, pollution is defined as the introduction of contaminants into
the environment that cause negative change. It can be found in noise, air,
and water. As we make more noise, it may disrupt the behavior of certain
animals in the ecosystem. In some studies, the effect of sound waves is
converted into heat, causing a slight change in the temperature of the
surrounding environment. Air pollution is a common occurrence in urban
areas. The culprits in contributing to air pollution are smoke-belching
vehicles and factory gases. On the subject of water pollution, the constant
disposal of garbage and the improper disposal of industrial waste have an
impact on our bodies of water, causing problems for marine life.
❖ Global warming due to emission of greenhouse gases
We emit greenhouse gases almost everywhere we go, such as when we
use electricity, cook, or drive our cars. We expel carbon dioxide as we

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 breathe out. The more people there are in a given area, the more carbon
dioxide is emitted into the environment. As these gases are produced,
heat is generated, resulting in a change in the climate.
❖ Overpopulation
Overpopulation causes a slew of issues. With the need for new homes,
the construction of new buildings, houses, and establishments is
necessary. Following that, demand for electricity, food, and other
greenhouse gases rises. Food scarcity can occur as a result of the
animals' limited ability to populate quickly. As a result, dishonest people
nowadays use chemicals and medications to boost and fake the growth of
these animals. Overpopulation also means that there will be more
garbage to dispose of.
❖ Natural resources depletion
Mining and quarrying have become widespread over the years, and they
are to blame for destroying the natural beauty of our environment. Water,
oil, and forests are the three most important natural resources we have. In
reality, fresh water accounts for only 2.5 percent of the world's total water
volume.If the problems with our bodies of water continue, the demand for
drinking water will rise, resulting in a water shortage and, in the worst-
case scenario, famine. Oil, on the other hand, is used every day for
transportation and electricity generation. Finally, statistics show that
deforestation contributes between 12% and 17% of annual greenhouse
gas emissions. Trees produce oxygen and filter the air we breathe.
However, with fewer trees, flash floods are more likely.
❖ Waste disposal
Improper waste disposal creates a risk for everyone. It has the potential to
infect people not only physically, but also through the air and water.
Garbage dumped in rivers and canals not only clogs them, but it also
invites rodents to infect the water, which can then be passed on to
humans. Clogged waterways have a tendency to spill, resulting in flash

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 floods, as is currently occurring in our country. Similarly, a lack of
adequate dumpsites and landfills is a barrier to resolving our garbage
management crisis.

XXII. INTERNATIONAL STRATEGIC ISSUES

> Expansion of a new business internationally means new target market and new
sources; we cannot deny the fact that the reason for business expansion is for profit.
Strategic issues always have unresolved and unending issues. Why? Because
globalization is definitely irreversible, which technically means that you cannot take
back what already exists, which makes the strategic issue of a business change and
adapt to changes.

Here are the guidelines that we should consider to continue to our international
operations:

1. International Organization Structure

2. Foreign Laws and Regulations

3. International Accounting

4. Cost Calculation and Global Pricing Strategy

5. Universal Payment Methods

6. Currency Rate

7. Choosing the right shipping methods

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 8. Cultural Differences
9. Worldwide environmental issues

XXIII. BUSINESS STRATEGY - IDEAS AND CONCEPTS

SWOT analysis identifies the strengths, weaknesses, opportunities, and threats.

PESTLE analysis talks about the influence of political, economic, social, technological,
legal, and environmental impacts.

PORTER'S FIVE FORCES ANALYSIS is a method for analysing competition of a

business.

The five forces are:

1. Bargaining power of suppliers - it is the pressure that the suppliers can put on
companies by raising prices or lowering the quality of their products.
2. Bargaining power of buyers - the pressure that the entity puts on their suppliers to
give them high quality products.
3. Rivalry among existing firms - the degree of rivalry to which firms respond to
competitive moves to the other firms of the industry.
4. Threat of substitute products - threat that the company has that other products may
displace their own.
5. Threat of potential entrants - threat of new competitors in the industry.

XXIV. CHOICE OF STRATEGY

Refers to the decision which determines the future strategy of a firm.

It addresses the question.. “Where Should we go?”

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FACTORS AFFECTING STRATEGIC CHOICE

● Environmental constraints
● Values & preferences
● Information constraints
● Impact of past strategy
● Time constraints

Three approaches to strategic choice:

● Competitive strategies - It influences the action/reaction patterns of an

organization that pursue for competitive advantage.
● Product market strategies - The organization competes and direction of growth.
● Institutional strategies - It involves the variety of informal and informal
relationships with other firms that are usually directed to the method of growth.

PROCESS OF STRATEGIC CHOICE:

1. Focusing on alternatives- narrow down the choice to a manageable number of

feasible strategies.
● At corporate level strategic alternatives are: expansion, stability, retrenchment,
combination
● At business level strategic alternatives are: cost leadership,
differentiation/focused business strategy

2. Analyzing the strategic alternatives- the alternatives have to be subjected to a

thorough analysis which rely on certain factors known as selection factors.

● Objective factors: based on analytical techniques and are hard facts

● Subjected factors: based on one's personal judgement

3. Evaluation of strategies- each factor is evaluated for its capability to help the
organization to achieve its objectives.

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4. Making a strategic choice- this must lead to a clear assessment of alternative which
is the most suitable alternative under the existing conditions
According to Michael Porter

1. Cost leadership strategy

Which is difficult to implement for small scale businesses because it involves long term
commitment by offering products and services at lower price in the market.

2. Differentiation leadership strategy

By identifying the attributes of a product by being unique from all competitors in the
industry.

3. Cost focus strategy

The targets a particular segment within the market. But, instead of offering lower prices
to consumers, firms differentiate themselves from their competitors that offer unique
features.

4. Differentiation focus strategy

The product must be different from similar products and services in the market through
brand quality and value added to be able to charge the premium price and also, to cover
up the high cost.

According to Igor Ansoff (1968)

1. Market penetration - focuses on increasing sales of an existing product to an

existing market.
2. Market development - focuses on introducing new products to an existing market.
3. Product Development Strategy - entering a new market using existing products.

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 4. Diversification strategy - entering a new market with the introduction of a new
product.
XXV. CORPORATE STRATEGY FOR A GLOBAL ECONOMY

Market Penetration
It is an excellent strategy to use when the business wants to market an existing
product in the same market where they already have a presence.
Market Development
Is a growth that identifies and develops to expand the sales of existing products
in new markets.
Product expansion
When the technology changes the advancements begin to decrease existing
sales, companies may expand their product line by creating new products or
adding additional features to their existing products.
Acquisition
A business can purchase from another company in the same industry to expand
the sales in that market and purchasers must be very clear on the benefits of
buying a business.
Diversification
This is even more risky than acquisition because of the significant cost involved
in creating contemporary products for unproven markets. Because the goal is to
sell novel products to new markets.

XXVI. INTERNATIONAL BUSINESS

International business encompasses a full range of cross-border exchanges of
goods, services, or resources between two or more nations. These exchanges
can go beyond the exchange of money for physical goods to include international
transfers of other resources, such as people, intellectual property, and
contractual assets or liabilities.

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 Examples of international firms include: Apple sells its products around the
world, but the headquarters and all product development are located within the
U.S.

XXVII. VALUE CHAIN

A value chain is used to describe all the business activities it takes to

create a product from start to finish. A value chain can consist of multiple stages
of a product or service’s lifecycle, including research and development, sales,
and everything in between.
Primary activities relate directly to the physical creation, sale,
maintenance and support of a product or service. They consist of the following:
1.) Inbound logistics
2.) Operations
3.) Outbound logistics
4.) Marketing and sales
5.) Service
6.) Support Activities
7.) Procurement (purchasing)
8.) Human resource management
9.) Technological development
10.) Infrastructure

XXVIII. INTERNATIONAL BUSINESS STRATEGIES

1. International - refers to planning and focusing on exporting products and services

to foreign markets

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 2. Multi-domestic - strategy by which companies try to achieve maximum local
responsiveness by customizing both their product offering and marketing strategy
to match different national conditions
3. Global - refers to a company when it wants to compete and expand in the global
market.
4. Transnational - it is a plan of action wherein a business decides to conduct
activities across international borders.
5. Political Perspectives

XXIX. INSTITUTIONAL STRATEGIES AND INTERNATIONAL BUSINESS

Institutional strategies are patterns of organizational action concerned with

the formation of transformation of institutions, fields and the rules and standard
that control those structure.

International business encompasses all commercial activities that take

place to promote the transfer of goods, services, resources, ideas, and
technologies across national boundaries.

XXX. TECHNIQUES FOR STRATEGIC ANALYSIS

Strategy analysis is an approach to facilitating, researching, analyzing,

and mapping.

CHANGES FOR OPPORTUNITIES

SWOT Analysis (Strengths, Weaknesses, Opportunities, and Threats)

PEST Analysis / PESTEL ANALYSIS Political, Economic, Social and

Technological factors, setting priority, allocating resources, planning for time and
development roadmap and formulating control mechanisms.

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Value Chain Analysis (COST REDUCTION)

How it adds value to something and subsequently how it can sell its
product or service for more than the cost of adding the value, thereby generating
a profit margin.
Five Forces Analysis (LEVEL OF COMPETITION)

Michael Porter developed the Five Forces Model in 1980. - reducing the
competitive pressure as well as generate competitive advantage.

Four Corners Analysis (Michael Porter)

Motivation — What drives the competitor? Look for drivers at various levels and
dimensions so you can gain insights into future goals.

Current Strategy — What is the competitor doing and what is the competitor
capable of doing?

Capabilities — What are the strengths and weaknesses of the competitor?

Management Assumptions — What assumptions are made by the competitor’s

management team?

Strategy Analysis using Process Map Design

Visual Paradigm Online provides a configurable process map designer for

business to create their on process maps for wide variety of are such as strategy
analysis, competitive analysis, process roadmap, comparison matrix, sales
process, etc

Competitor Analysis

Getting to know your competitor’s strengths and identifying the best

marketing strategies.

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 Root Cause Analysis

Getting to know the underlying causes of incidents and problems can

prevent recurring issues and thus saving you significant operation costs.
XXXI. DEFINITION OF TERMS
1. Customs - established practice or usage having the force of law or right.
2. Procedural - relating to an established or official way of doing something.
3. Reparations - the making of amends for a wrong one has done, by
paying money to or otherwise helping those who have been wronged.
4. jus cogens - the principles which form the norms of international law that
cannot be set aside.
5. Peremptory - not open to appeal or challenge; final
6. Adhere - believe in and follow the practices of.
7. Superseded - take the place of (a person or thing previously in authority
or use); supplant.
8. Genocide - the deliberate killing of a large number of people from a
particular nation or ethnic group with the aim of destroying that nation or
group.
9. erga omnes - towards all
10.Adjudicate - make a formal judgment or decision about a problem or
disputed matter.
11.Patents - a government authority or license conferring a right or title for a
set period, especially the sole right to exclude others from making, using,
or selling an invention.
12. Jeopardizing - put (someone or something) into a situation in which there
is a danger of loss, harm, or failure.
13. Bribe - persuade (someone) to act in one's favor, typically illegally or
dishonestly, by a gift of money or other inducement.
14. Contaminants - are defined as “substances (i.e. chemical elements and
compounds) or groups of substances that are toxic, persistent and liable

38
 to bioaccumulate, and other substances or groups of substances which
give rise to an equivalent level of concern”.
15. Ethics - moral principles that govern a person's behavior or the conduct of
an activity.
16. Business ethics - a practice that determines what is right, wrong, and
appropriate in the workplace.
17. Corporate culture - collection of values, beliefs, ethics and attitudes that
characterize an organization and guide its practices.
18.Legislative - the most powerful institution whose role is to make the law
and others such as policy making and approval of budgets.
19. Executive - Referred to as the government. It is responsible for
implementing the law and to shape, direct, and control the business
activities.
20. Judiciary - responsible for interpreting and applying laws.
21. Irreversible - not able to be undone or altered.
22. Entrants - person who becomes a member of a group
23. Rivalry - competition for the same objective or for superiority in the same
field.
24.Deontological - The word deontology derives from the Greek words for
duty (deon) and science (or study) of (logos)
25. Virtue - Virtue is the quality of being morally good.
26. Agents - a person who acts on behalf of another person or group.
27. Diversification - Diversification is a risk management strategy that
mixes a wide variety of investments within a portfolio.
28. Indulgence - an occasion when you allow someone or yourself to have
something enjoyable, especially more than is good for you
29. Universalism - a theological doctrine that all human beings will
eventually be saved

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 30. Adhocracy - Adhocracy is a form of business management that
emphasizes individual initiative and self-organization in order to
accomplish tasks.
XXXII. REFERENCES
● https://www.thebalance.com/mixed-economy-definition-pros-cons-example
s-3305594
● https://www.slideshare.net/rupeshnyaupane/technological-environmentenv
ironment
● https://www.oksbdc.org/why-is-technology-important-in-business/
● https://www.ganintegrity.com/compliance-glossary/business-ethics/
● https://www.thestreet.com/personal-finance/what-is-business-ethics-15026
364
● https://www.boardeffect.com/blog/5-steps-creating-ethical-organizational-c
ulture/
● https://magazine.ethisphere.com/culture-matters/
● https://online.hbs.edu/blog/post/what-is-value-chain-analysis
● https://marketbusinessnews.com/financial-glossary/global-strategy/#:~:text
=A%20global%20strategy%20is%20one,target%20growth%20beyond%20
its%20borders.
● https://www.superheuristics.com/what-is-transnational-strategy/#:~:text=A
%20transnational%20strategy%20is%20simply,in%20which%20the%20co
mpany%20operates.
● https://dictionary.cambridge.org/us/dictionary/english/entrant

● https://www.google.com/amp/s/strategiccfo.com/threat-of-new-entrants-on
e-of-porters-five-forces/amp/
● https://corporatefinanceinstitute.com/resources/knowledge/strategy/bargai
ning-power-of-suppliers/#:~:text=The%20Bargaining%20Power%20of%20
Suppliers,the%20availability%20of%20their%20products.

40
● https://www.investopedia.com/terms/a/adhocracy.asp#:~:text=Adhocracy
% 20is%20a%20form%20of,Alvin%20Toffler%20in%20the%201970s .
● https://dictionary.cambridge.org/us/dictionary/english/indulgence
● https://www.vocabulary.com/dictionary/virtue
● https://plato.stanford.edu/entries/ethics-deontological/

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